NEW ORLEANS (Nov. 15, 2024) — As Louisiana’s Governor Jeff Landry’s tax reform proposal unfolds in the legislature, one of the most politically contentious aspects is the potential elimination of the state’s film tax credit. This incentive has long been vital to Louisiana’s local film industry, attracting filmmakers to shoot in the state and providing significant economic benefits. But with the proposed changes, the future of this crucial program is in jeopardy.
“The Governor’s tax reform plan is mainly the brainchild of Richard Nelson, who is the Secretary of the Louisiana Department of Revenue,” says Tax Attorney Sanders Colbert of Stone Pigman Walther Wittmann. “The Department of Revenue has already been looking at the return on investment (ROI) of the film industry tax credit before proposing its early phase-out, although the benefits of the program are currently being inspected very closely by the legislature during the ongoing extraordinary legislative session.”
Since its inception in 1992, the Louisiana Film Tax Credit has been a powerful tool for attracting major film and television productions to the state. However, the financial effectiveness of the program has come under increasing scrutiny in recent years. According to the 2023 Return on Investment Analysis for Selected Tax Incentive Programs, the state’s film tax credit shows mixed returns. In FY22, $143.7 million in credits were claimed out of a $180 million cap, but the ROI was uneven, with some projects yielding severe losses — including negative ROI figures as low as -93.03%.
While some argue that the tax credit has brought an influx of production, the variability in returns raises concerns about its long-term sustainability. These mixed financial results have prompted the state to reconsider its commitment to the program, even as the film industry continues to advocate for its importance.
“Louisiana certainly has a dynamic film industry but, according to two of my studies, and those of several other economists, tax incentives have little impact,” says Dr. Patrick J. Button, associate professor of economics at Tulane and the executive director of The Connelly Alexander Institute for Data Science. Button expresses skepticism toward the claims made by lobbyists and industry representatives, emphasizing that the film industry has been growing in Louisiana and similar states regardless of the incentives.
“In my statistical analysis of independent economic and filming location data, I find that film incentives affect where TV series film, but not feature films. Even though the incentives cause some filming to relocate, I find no effect on employment, business establishments and wages in the motion picture production industries, in related industries, or for related occupations like independent artists. Even when I looked at a best case scenario, like my case study of Louisiana’s early adoption of a major film incentive in 2002, that incentive only increased feature films and also did not add jobs or businesses in the film industry. Other independent researchers came to similar conclusions.”
Rising Concerns Over Job Losses and Economic Impact
Film industry workers in Louisiana, many of whom rely on the state’s tax incentives for their livelihoods, are worried about the potential consequences. “The truth is, this tax credit has allowed many of us to make a living in an industry we love,” says Jason Waggenspack, President of Film Louisiana and founder of The Ranch Film Studio in Chalmette. “If this is taken away, it could decimate the local film economy and cost thousands of jobs.”
Waggenspack has been vocal on social media, where he shared key statistics to combat the negative press surrounding the tax credit. According to Waggenspack, the film industry creates 10,000 jobs annually in Louisiana, with an average salary of $68,000 per year. It also generates $1 billion in annual sales for local businesses and contributes $350 million in payroll to Louisiana residents each year.
The argument for the film tax credit is not just about protecting jobs in the entertainment sector, but also preserving a vital component of Louisiana’s economy. In recent years, the state has become one of the top filming locations in the U.S., attracting major productions and bolstering local businesses in sectors like hospitality, construction and catering.
The Growth of Louisiana’s Gaming Industry Raises Questions
While the film tax credit faces scrutiny, other sectors in Louisiana, such as the digital media and video game industries, have seen impressive growth. In contrast to the film sector’s inconsistent ROI, the Digital Interactive Media & Software Credits — which include video game development — saw a significant increase in ROI, from 38.13% in FY 2022 to 80.11% in FY 2023. This sharp rise in economic return highlights the growing appeal of the gaming industry as a more stable, long-term investment compared to the volatile nature of film production.
Companies like Turbosquid (now part of Shutterstock), Digital Twin Studios, DAQA and Striker VR are expanding their operations in Louisiana, providing well-paying, year-round jobs in fields ranging from 3D content creation to virtual reality development. These growth sectors are helping to diversify the state’s economy and lessen the reliance on the film industry, which, by nature, depends on temporary contracts and is more vulnerable to the fluctuations of tax incentives.
Some experts point to the fact that the 2022 and 2023 numbers reflect impact from the Writers Guild of America strikes and a period of filming that was still struggling due to pandemic aftermath.
Louisiana’s Film Incentives Amid National Shifts
The proposed elimination of Louisiana’s film tax credit is a key part of Governor Landry’s broader tax reform plan, which also includes changes to other programs, such as the historic tax credit. These proposed cuts are creating political divides. Some lawmakers argue that the film tax credit has led to a net loss for the state’s finances, while others maintain that the program has been a key driver of economic growth and job creation.
As the legislature weighs the potential changes, industry leaders and workers are speaking out. Assistant director Jon Shaw, a New York City resident who has worked on major productions like “Law & Order: Special Victims Unit” and “Gossip Girl,” expressed concern over the uncertainty of the Northeast film sector. “It’s definitely not as busy as it used to be,” Shaw says. “I thought things would pick up after the [writer] strikes, but they haven’t.” (Shaw worked in New Orleans for the 1994 film “Interview with the Vampire.”)
Meanwhile, for young professionals like Daniel Lamplugh, a 2019 graduate of the University of New Orleans who studied film, the situation is even more challenging. Lamplugh, who initially moved to New Orleans to pursue a career in post-production editing, found that the local market had dried up after the pandemic. “I didn’t want to work on set; I wanted to work in post-production, but the opportunities just weren’t there,” he says. “When Covid hit, things got even worse. So, I decided to move to Los Angeles, where there’s more work.”
Lamplugh’s decision to leave is indicative of a broader trend. The entertainment industry is becoming increasingly mobile, with production crews and studios moving to regions, sometimes internationally, offering more favorable tax incentives. As reported by industry outlets like Deadline and Variety, this trend is pushing Louisiana to the edge of losing its status as a prime filming destination. Ohio, for example, has seen a surge in film production and is even bidding to host the Sundance Film Festival, a bid that the prestigious film festival is seriously considering.
A Dilemma for Louisiana’s Future as a Film Hub
As the Louisiana legislature considers eliminating the film tax credit, film workers and industry leaders are asking: What does this mean for the future of film in the state? Will Louisiana continue to be a major destination for filmmakers or will the industry be forced to relocate to more tax-friendly states and countries?
The stakes are high. Louisiana’s film and television workers — who are fully based in the state and have no intention of leaving — argue that while the petrochemical industry receives the state’s most lucrative tax incentives, the $150 million allocated annually to the film sector is crucial for the survival of their jobs and the continued growth of the local economy.
Despite the ongoing debates about the ROI of the film tax credit, the fact remains that the film industry in Louisiana has become a major economic driver. While the petrochemical sector creates 45,000 direct jobs in the state, the entertainment industry, according to Film Louisiana’s pollsters at JMC Analytics, supports 10,000 jobs and generates substantial revenue through its production, distribution and support sectors.
According to Colbert, the tax incentives for the petrochemicals industry are largely specific provisions tailored to the sector’s unique operations, such as expensing intangible drilling costs or applying standard depreciation rules for capital-intensive businesses. These incentives are not special “breaks,” but rather reflect the industry’s structure. Furthermore, the oil and gas sector is a major tax revenue generator for governments, often subject to higher taxation than other industries, including severance taxes on oil and gas production in addition to regular income and property taxes.
The main concern about the Louisiana film industry tax credit is that it is a net revenue loser for the state government (as in, the Louisiana Department of Revenue’s data indicates thar for every dollar in tax credits given out, they receive less than a dollar in additional tax revenue ultimately generated from the additional economic activity of the film industry in the state). Thus, the main concern about the Louisiana film industry tax credit is that it is a net revenue loser for the state government.
For Landry and some constituents, the numbers generated by Film Louisiana and its supporters are simply too hazy to determine a benefit to the average Louisiana resident.
As the debate continues, film industry workers are left wondering whether Louisiana’s film industry can continue to thrive in the face of these proposed tax changes.
